The present invention relates generally to systems and methods for factoring invoices.
Factoring as a financing method is believed to have existed since ancient times. Generally, it is a method of borrowing against accounts receivable. That is, a business in need of cash approaches a funding source, for example a bank, and offers to exchange its accounts receivable to the funding source in exchange for an agreed-upon percentage of the receivable balance. The funding source, in turn, examines the client's credit worthiness and may investigate the client's customer base. Based on this information, the funding source determines whether or not to factor the client's accounts.
If the funding source agrees to factor the receivables, the client provides information to the funding source describing the group of invoices to be factored. The funding source provides the agreed-upon funds to the client and begins to collect against the invoices. Traditionally, there is little or no analysis of individual invoices prior to making the decision whether or not to factor, particularly in large-scale factoring transactions.
It is known, however, for a small scale funding source to determine whether to enter a factoring arrangement based on an invoice-specific investigation. Generally, these transactions involve clients having a relatively low level of accounts receivable, for example less than $50,000 in any given month. When such clients provide the funding source with a list of invoices to be factored, the funding source manually verifies each invoice by confirming with the client and its customers that each invoice is legitimate and that the goods and services under the invoices have been provided. This is primarily accomplished by verbal or written communication with the client and customers or, where available, by verification from a third party, for example a shipping company, to confirm that goods provided under an invoice have been delivered.
Repeat use of reference characters in the present specification and drawings is intended to represent same or analogous features or elements of the invention.